November 07, (THEWILL) — Mounting fears over the planned enforcement of Capital Gains Tax (CGT) on share transactions have rattled the Nigerian equities market, triggering a sharp sell-off that has erased about ₦1.8 trillion in market value within just four trading days.
The Nigerian Exchange (NGX) suffered steep declines this week as investors dumped stocks amid concerns that the proposed implementation of CGT on capital market earnings could further squeeze returns and dampen portfolio performance.
Market analysts note that the downturn reflects a growing crisis of confidence, as traders and institutional investors await clarity from the Federal Government and tax authorities on the scope and timing of the tax policy.
The sell-off pushed the All-Share Index (ASI) below key resistance levels, with market capitalization dropping from about ₦58.6 trillion to ₦56.8 trillion. Financial and blue-chip stocks were among the hardest hit, with foreign portfolio investors leading the sell pressure.
Although external developments, including global market jitters over a possible return of Donald Trump to the U.S. presidency, have influenced investor sentiment, the sharp slide in Nigerian equities is largely attributed to domestic tax policy fears.
The Federal Government has in recent months signaled plans to expand its tax base to boost non-oil revenues, including renewed enforcement of the 10% Capital Gains Tax on profits from asset disposals. Investors worry that this could extend to stock market transactions, thereby eroding returns and discouraging participation.
The uncertainty has left trading volumes subdued as investors adopt a cautious stance. Until authorities provide clearer communication on the CGT policy, analysts warn that market sentiment is likely to remain fragile, prolonging the bearish trend in the short term.
Despite the sell pressure, some fund managers believe the pullback could create opportunities for bargain hunting in fundamentally strong stocks once policy clarity returns.
Still, for now, the anxiety over CGT remains the dominant force shaping market direction, underscoring the sensitivity of investor confidence to fiscal policy signals.
Ogochukwu Onwaeze
